Selling Inherited Property in India as an NRI in UAE — TDS, Capital Gains & Repatriation

How capital gains are calculated on inherited property

Under Section 49 of the Income Tax Act, the cost of acquisition for inherited property carries over from the original owner rather than resetting to the property's value on the date of inheritance, and the holding period counts from the original owner's date of acquisition — so most inherited-property sales qualify for long-term capital gains treatment, with indexation benefit available where applicable. This computation is identical for an NRI seller based in the UAE as it would be for one based anywhere else — India's tax rules apply based on the seller's non-resident status, not their specific country of residence.

TDS under Section 195 — why it's higher than for resident sellers

Section 194-IA's 1% TDS applies only to resident sellers. For a non-resident seller — regardless of which country they live in — the buyer must instead deduct TDS under Section 195, generally on the full sale consideration at the capital-gains rate unless a lower-deduction certificate has been obtained.

Getting a lower or nil TDS certificate (Form 13 / Section 197)

An NRI seller in the UAE can apply to the jurisdictional Assessing Officer, via Form 13 under Section 197, for a certificate authorizing TDS at a lower or nil rate based on the actual computed gain — worth evaluating with a chartered accountant before the sale closes.

Repatriation of sale proceeds via FEMA

Net sale proceeds are typically credited to the NRI's NRO account in India. FEMA rules permit repatriation abroad of up to USD 1 million (or equivalent) per financial year, cumulative across eligible remittances from that account, subject to the authorized dealer bank receiving Form 15CA (and Form 15CB where applicable) — this process is the same for an NRI remitting to a UAE bank account as it is for any other destination country.

Why there's no double-taxation relief needed on the UAE side

Because the UAE does not levy personal income tax, there is generally no UAE-side tax on this capital gain to seek relief against — unlike an NRI in the USA, UK, Canada, or Australia, who typically needs to claim a foreign tax credit against home-country tax on the same gain. This does not reduce the Indian tax or TDS obligation in any way; it only means the DTAA's double-taxation-relief mechanism is largely moot on the UAE side. An NRI in the UAE who also holds other tax residency ties (for example, US citizenship or a green card) should separately confirm their reporting obligations in that other jurisdiction, since UAE residence alone does not exempt a US citizen or green card holder from US tax filing requirements.

Common mistakes in this process

• Assuming the resident 1% TDS rate applies once the seller has become an NRI.
• Not applying for the Section 197 lower-deduction certificate before the sale closes.
• Leaving Form 15CA/15CB paperwork until after proceeds reach the NRO account.
• Assuming UAE tax residency eliminates all foreign reporting obligations, without checking other citizenship/residency ties that may still require disclosure elsewhere.